-
Source: ONE News -
Watch Video
-
Related
Is a recovery in sight for the New Zealand economy?
This week's December 2009 quarter economic growth number of 0.8% is
encouraging news as it confirms New Zealand's economy is at the
very least on its way towards a more traditional post recession
rebound.
Typically growth following a sharp recession is strong, as there is
usually a lot of spare capacity in the economy i.e. more available
workers and resources.
This means the economy can run faster than it normally would - for
a little while at least - without sparking too much
inflation.
And Thursday's figures do show the wheels of the economy are
starting to move.
Manufacturing grew strongly and there was presumably less reliance
on government spending to boost growth.
However as the ANZ National Chief Economist
Cameron Bagrie keeps pointing out , we are NOT
quite into our 'V' shaped recovery yet...and a bit more water under
the bridge has to flow.
This is because we don't know if the inventory rebuilding that took
place in the last three months of last year has flowed over into
2010.
In fact some commentators like Bagrie suggest business conditions
have been a little bit sluggish in the first couple of months of
this year.
Certainty the housing market has run out of some steam and credit
growth has not been stellar.
Because of this uncertainty about the start of 2010 it seems
unlikely the Reserve Bank will bring forward an interest rate
hike.
June still seems like the most likely scenario for the first hike,
although those in the export sector would prefer it to be delayed
further as hike will most likely push up the Kiwi dollar versus the
US.
It should all be a lot clearer once we get more inflation and
unemployment data in late April and May.
So if you are on a floating mortgage rate, but are looking to fix
at some point&watch out for these data sets as they should
provide a good clue on what the Reserve Bank's thinking will
be.
If they come through strongly and show the economy is gathering
momentum then you might want to start looking at your options.
